Have a tax question? Need a tax form, filing instructions or an
IRS publication? Look to the Internet. The IRS debuted its Web site
in January 1996, and it has already been accessed more than 271
million times.

"There are publications available that pertain to
homebased businesses, such as publication number 587, Business
Use of the Home," says Steven Pyrek at the IRS. "Tax
forms for sole proprietors and for claiming expenses for the
business use of your home are there, and the Q&A section [is]
about homebased businesses."

Other offerings include:

*IRS Newsstand: A listing of IRS news releases and fact
sheets.

*Plain English: Simple-to-understand summaries of IRS
regulations.

*Tax Stats: Data compiled from individual and business returns
filed with the IRS, and other sources.

*Taxpayer Education: Easily digestible summaries of 140 tax
topics.

*A keyword search and site tree for all available topics, plus a
list of IRS electronic services.

Visit the IRS at http://www.irs.ustreas.gov

Virtual Teller

Home banking is a homebased entrepreneur's dream come true.
Twenty-four hours a day, seven days a week, you can check balances,
transfer money between accounts, see what checks have cleared and
monitor corporate credit cards from your office.

"When running a homebased business, you may find yourself
working at 11 o'clock at night and wanting to check
balances," says John Hall of the American Bankers Association.
"With home banking, you can."

New services are always on the horizon. "The killer
application in PC-based banking will be when the machine can spit
out cash through your home PC like an ATM," says Hall.

If you're considering home banking, shop around for the best
deal. Some small and big banks--including Bank of America and Wells
Fargo--offer free use of home banking services in combination with
other accounts. Some offer it free with minimum balances; others
offer free software but charge a monthly fee. Look for the package
that works best for you.

Pay Day

The sooner you get paid for your products or services, the
sooner you can invest the money. Here are two tips for speeding up
the collection of receivables.

Five days before payment is due, call the customer. Ask whether
they're happy with the product or service and remind them that
payment is due shortly.

"It's an easy way to remind them payment is due,"
says W. Kelsea Eckert, owner of Eckert Law Firm P.A. in
Jacksonville, Florida, and author of Getting Paid In Full
(Sourcebooks Inc.). "It works because a happy customer has a
harder time ignoring a debt."

Incentives also work well. On your invoice, offer a 2 percent
discount if the total is paid within 10 days. Or, for late
payments, call and offer a 2 percent discount for immediate
payment.

Room Tax

Working at home pays off . . . sometimes. As
you've probably discovered, you get a tax break as soon as you
open for business because you're allowed to depreciate the
portion of your home you use as an office. Well, there's one
little catch: When you sell your house, you'll recapture that
depreciation and pay tax separately on your home office.

"You have to calculate two separate gains," says James
Ferrell, a CPA with accounting firm Chastang, Ferrell, Sims, &
Eiserman, P.A. in Winter Park, Florida. "If you use 10 percent
of your home for your office, you have to allocate 90 percent of
the gain to the personal side of the home and 10 percent to the
business."

For example, let's say you bought your home for $120,000.
You subtract out the land cost of $20,000, leaving an actual
structure cost of $100,000. If you use 10 percent of your home as
an office, you can depreciate $10,000 over 39 years, which works
out to approximately $256 per year. After three years, you've
depreciated the business portion of the house by $768, which gives
you a tax basis on the business portion of the house of $11,232
($12,000, which is 10 percent of the purchase price of your home,
minus $768).

You then sell your house for $150,000--$30,000 over the purchase
price. Because you took a home office deduction instead of a
realized gain of $30,000 on your personal residence, you'll
have a realized gain of $27,000 on your residence and a recognized
gain of $3,768 ($3,000 plus $768) on your home office.

The $27,000 is a realized gain but not a recognized gain if you
purchase another home that is more expensive than the one you sold.
Therefore, you can defer the tax on the personal residence portion
of the gain. However, the office portion of the gain of $3,768 must
be recognized unless you stopped using the space as an office at
least one year prior to the sale. In that instance, the total gain
can be rolled over and tax-deferred, or if you sell your house for
less than the purchase price, no tax will be due.

But if you're going to have to pay that tax when you sell
your house, you may wonder if the home office deduction is worth
taking. "It's worth it because the name of the game in tax
planning is deferral," says Ferrell. "If you can defer a
tax liability to a later date, you should."

When you sell your house, you'll have to deal with the home
office tax issue; when dealing with taxes, consult with your tax
advisor first.

It All Adds Up

By Heather Page

Personal finance programs are great for organizing your income
and tracking expenses, but they often lack features that many
homebased business owners could use, such as invoicing. Now Intuit
Inc. has released Quicken Home & Business 98 for Windows
($89.95), a new version of the personal finance program that also
delivers easy invoicing, receivables tracking and tax help.

Available for Windows 3.1 and higher, Quicken Home &
Business 98 is designed specifically for those whose business and
personal finances intermingle, such as consultants and sole
proprietors.

Quicken Home & Business includes customizable invoices,
which you can personalize by adding your own logo and
industry-specific categories. You can also enter invoice
information on pre-set client registers; the program then
automatically calculates state taxes that need to be applied.
Intuit's newest Quicken version offers to make homebased
business owners' lives--and businesses--easier to manage.